Swiss talks at critical stage possible deadline looms

At the same time, the negotiator, Michael Hausfeld, a lawyer representing Holocaust victims, cautioned against both "false hopes" and "undue pessimism."

It is against this backdrop that conflicting reports have emerged about whether Switzerland's three largest private banks have made a firm offer to Jewish negotiators.

One source familiar with the negotiations said the Swiss banks — Union Bank of Switzerland, Credit Suisse and Swiss Bank Corp. — offered a settlement totaling more than $1 billion to resolve claims brought by Holocaust survivors who charge that the banks failed to return their assets after World War II.

The banks denied that an offer had been put forward, as did a reliable source, who characterized the negotiations as "tenuous." Another source said a "chasm" of differences remained between the two sides.

The World Jewish Congress, lawyers representing Holocaust victims and the Swiss banks have been holding settlement talks in recent weeks under the aegis of the U.S. State Department. The negotiations are being held under rules of strict confidentiality.

A key sticking point in the talks involves the question of what exactly an agreement with the banks would cover.

The WJC, which has spearheaded international efforts to pressure Switzerland to confront its wartime past, has been pushing Switzerland to reach a global settlement that would resolve all claims stemming from Swiss actions during World War II.

Such a settlement would presumably address the claims being pursued in a multibillion-dollar class-action suit brought by Holocaust survivors.

The banks, however, have so far refused to negotiate any claims not directly related to the banks themselves.

And the Swiss government, together with its central bank, the Swiss National Bank, has ruled out using taxpayers' money to pay into any settlement.

"Switzerland will not participate in such settlements," Swiss President Flavio Cotti said over the weekend.

In a move that could increase pressure on the Swiss government to reach a settlement, lawyers representing Holocaust victims are planning to sue the Swiss National Bank for its role in accepting the vast majority of gold looted by the Nazis, including gold stolen directly from Holocaust victims.

The suit was postponed earlier this month amid attempts to first reach a settlement with the private banks.

A spokesman for the Swiss National Bank, Werner Abegg, said, "We believe that there are no grounds for class action suits against us, and we will use every legal option to defend ourselves from such unjustified claims."

One source said the differences between what some Jewish negotiators are seeking and what the banks are willing to negotiate has further complicated matters.

There are some who feel that if the Swiss National Bank doesn't join in with the other banks in a global resolution, "they don't want any resolution," the source said.

Another source said, however, that such an assessment is "flat-out wrong."

The reported settlement offer from the banks was said to have come just days before the New York state Banking Department decided to approve a merger between Union Bank of Switzerland and Swiss Bank Corp. The U.S. Federal Reserve gave final approval to the deal this week, which will form the world's third largest bank.

The WJC made no objection to the move, which some took as a sign that progress had been made with Swiss banks toward reaching a settlement of Holocaust-era claims.

On a related front, lawyers involved in the negotiations met this week with an advisory group of Jewish organizations to consult them about the current status of the negotiations.

Like the participants in the settlement talks, those who took part in the advisory group signed strict confidentiality agreements and declined to discuss the meeting.

The June 30 date was set by U.S. public finance officers, who want a progress report on the negotiations to avert the threat of sanctions against the banks.

"A lot of time has been spent with almost no progress, and the need for progress has certainly telescoped itself," the source said.

"It's got to get done and the longer it doesn't get done, the greater the potential it will never get done."